McKesson laying off 1,600 employees

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Dive Brief:

The San Francisco-based drug distributor McKesson has laid off approximately 1,600 employees, or roughly 4% of its U.S. workforce, the company said in a statement.

A January review led to the decision, which the company said was needed to reduce costs.

Just last month, Mckesson acquired Rexall Health from Katz group for $2.3 billion to help position the company in the Canadian market. The company has also recently invested $1.2 billion in two oncology acquisitions.

Dive Insight:

In January, McKesson said it expected weak generic drug pricing and the expiration of its contract with UnitedHealth's Optum to hold back earnings. It cut its projected earnings per share to $12.60 - $12.90 from a previous range of $12.50 to $13.00

The company also announced a review of its "administrative cost structure" at the same time, which led to the decision.

"After careful consideration, the company determined that reductions to our workforce would be necessary to align our cost structure with our business needs," the company said in a statement.

McKesson started to tell employees of the layoffs in mid-March and the process is ongoing.

This post has been updated to reflect a statement from McKesson. BioPharma Dive will update this post when more information is available.